May 4, 2004 2:30 PM PDT

HP merges services, high-end computing units

Hewlett-Packard has completed a merger of its services and high-end computing divisions, with services chief Ann Livermore taking the reins of the new, larger unit.

HP had given itself until the end of October to finish the planned reorganization, but Livermore said Tuesday that she now heads the new Technology Solutions Group. That division includes HP's 65,000-person services unit as well as the company's server computer, storage and software businesses. Together, the businesses making up the new unit accounted for about $28 billion of revenue in HP's last fiscal year. The company's total revenue for the year ended Oct. 31, 2003, was roughly $73 billion.

HP made the organizational switch to package its products more effectively for clients, Livermore said. "It's entirely driven by customers," she said. "They want an integrated solution to solve a problem."

The shift, officially completed May 1, means different responsibilities for Peter Blackmore, who had headed HP's enterprise systems business. He now is in charge of sales to enterprise customers, small and midsize businesses and public-sector clients, Livermore said.

Both Blackmore and Livermore will continue to report directly to CEO Carly Fiorina.

Gordon Haff, an analyst at research firm Illuminata, suggested that the consolidation of units may create some sales opportunities for HP, but it also means that the services business will appear less independent to customers. IBM's services unit, by contrast, remains a separate division, he noted. "It makes it difficult for HP services to go in there and say, 'We'll help you select the best systems for your problem, no matter whom they come from,'" Haff said.

Livermore said HP is a leader in servers, storage, software and services. For example, HP is No. 2 in server sales and No. 2 in sales of a key class of data storage gear, according to research firm Gartner.

HP's restructuring amounts to a significant promotion for Livermore, whose services group accounted for $12.3 billion in revenue in the company's last fiscal year.

Livermore had been considered the top pick, when HP looked to replace its CEO in 1999. Instead, the company chose Fiorina, who was president of Lucent Technologies' Global Service Provider business.

 

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